Did Slavery Make America Rich?
March 1, 2022 | View PDF
The New York Times’ 1619 Project examines the impact of slavery on America. One essay contends that our economic system was built on slavery. Was America’s ascension as an economic powerhouse due to slavery?
Slavery was a repugnant and evil institution. Its abolition is a sign of humanity’s moral progress. Slavery taints America’s founding and was incompatible with “all men are created equal.” Yet Emancipation took ninety years and a terrible civil war, plus another 100 years to extend the promise of freedom to all Americans.
Journalist Nikole Hannah-Jones curated the series of essays. Princeton University’s Matthew Desmond authored the essay linking American capitalism to slavery, drawing heavily on the scholarly research of the “New History of Capitalism” (NHC). I will focus on Desmond’s claim that, “Slavery was undeniably a font of incredible wealth.”
Economic historians have extensively studied slavery, including Nobel Prize winner Robert Fogel. Economic theory and econometrics have illuminated the institution’s operation. Economic historian Phillip Magness draws on this plus his own research in his The 1619 Project: A Critique, which I rely on here.
A plausible connection exists between slavery and prosperity during the first half of the 1800s. Textiles produced using cotton largely from the southern U.S. were an enormous part of the Industrial Revolution.
Before examining economic details, let’s consider the big picture. Slavery existed throughout human history. If slavery really could produce “incredible wealth,” presumably humanity would have prospered before 1776 or 1619.
How important was cotton to the American economy? NHC Historian Edward Baptist claims that cotton accounted for nearly half of U.S. economic activity in the 1830s, a statistic cited supporting reparations for slavery. As Dr. Magness describes, Baptist erred; he “proceeded to double and triple count intermediate transactions involved in cotton production,” namely things like tools, land, and transportation. Yet GDP includes only final goods and services to avoid double counting. As Magness continues, “Baptist’s numbers are not only wrong – they represent a basic unfamiliarity with the meaning and definition of GDP.”
Professor Desmond, again following NHC historians, attributes the 400 percent increase in cotton productivity between 1800 and 1860 to American slavery’s brutal efficiency. But economists Alan Olmstead and Paul Rhode, who established the productivity increase, attributed it to improvements in cottonseeds.
Another Desmond claim was the necessity of slavery to produce cotton in sufficient quantities. This turns on a technical question, returns to scale in cotton production. If economies of scale existed, only large plantations using slaves might have been able to capture these economies. Yet economic historians found no important returns to scale; Stanford’s Gavin Wright concludes that cotton, “could be cultivated efficiently at any scale.”
Furthermore, if slavery was necessary to produce cotton, supply should have collapsed following Emancipation. Yet the price of cotton returned to pre-war levels by the end of the 1870s.
Economists have documented an enormous increase in standards of living beginning around 1800. A plot of world per capita GDP over time shows a true hockey stick shaped takeoff then. Economic historian Deirdre McCloskey calls this the Great Enrichment. Humanity prospered as slavery was abolished.
People long believed that commanding and enslaving others was the key to prosperity. This was incorrect. Professor McCloskey argues that thousands and thousands of improvements, discovered through the imagination and intelligence of ordinary people, produced the Great Enrichment. Prosperity results when freedom unleashes everyone’s full potential.
A society organized on commands and whips requires obedience, which in turn requires keeping the underlings from fully recognizing their humanity. Once Harriet Tubman recognized her value as a human being, she was never going to be anyone’s slave. Slaves repeat the tasks they are commanded to perform as opposed to discovering how to perform these tasks more efficiently.
The political philosophy of liberalism, founded on the moral equality of all people, gave birth to capitalism. Liberalism implies both that government must serve the citizens and that no human being should be a slave. That capitalism produced modern prosperity and ended slavery is no accident.